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Caterpillar Beats Q3 Earnings Forecast Despite Demand Slump

Caterpillar posts stronger-than-expected third quarter earnings even as demand for its industrial equipment slumps notably lower from last year amid the global coronavirus pandemic.

Caterpillar (CAT) - Get Caterpillar Inc. Report posted stronger-than-expected third-quarter earnings Tuesday even as demand for its industrial equipment slumped notably lower from last year amid the global coronavirus pandemic.

Shares were also hit by the group's reluctance to provide a full-year profit outlook, as well as the ongoing suspension of its stock buy-back program.

Caterpillar said earnings for the three months ended in September came in at $1.22 per share, down 54.1% from the same period last year but 4 cents ahead of the Wall Street consensus forecast. The group added, however, that earnings took a 12 cents per share hit thanks to the re-marking of pension obligations.

Group revenue, Caterpillar said, fell 22.6% to $9.9 billion, just ahead of analysts' estimates of a $9.8 billion tally. Operating profit margin was 10% for the third quarter of 2020, compared with 15.8% for the third quarter of 2019.

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Caterpillar said the sales decline was largely linked to lower demand for equipment and services, with construction sales down 23% to $1.233 billion and energy and transportation sales down 24% to $4.161 billion

"I'm proud of our global team's performance as we continue to safely navigate the pandemic while remaining firmly committed to serving our customers," said CEO Jim Umpleby. "Our third-quarter results largely aligned with our expectations, and we're encouraged by positive signs in certain industries and geographies. We're executing our strategy and are ready to respond quickly to changing market conditions."

Caterpillar shares were marked 1.55% lower in early trading immediately following the earnings release to change hands at $160.63, a move that would trim the stock's six-month gain to around 39.5%.

Caterpillar said it ended the quarter with $9.3 billion in cash and more than $14 billion in liquidity sources.